A Beginner's Guide to Real Estate Investing in San Antonio
by Alex Lewis
With home values appreciating in San Antonio, it’s a great time to think about buying so you can start seeing the benefits for yourself. Even if you never take the extra steps to directly monetize your real estate purchase—like flipping, short term renting, or leasing out your home—at least you’ll start putting more money in your own pocket, as opposed to the pocket of someone else.
"It helps to put homeownership in perspective: If there is a roof over your head, you’re either paying a landlord’s mortgage or you’re investing in your own future."
But real estate investment offers more than just an escape from paying rent.
The Benefits of Investing in San Antonio Real Estate
There are sides to home investment that are not passive, such as house flipping. But as a rule of thumb, whether you live in the home yourself or someone pays you rent month-to-month, being a homeowner can put serious cash in your pocket with (for the most part) minimal effort.
Financial and Lifestyle Autonomy
Passive income through real estate investment has a way of leading many homeowners to great financial freedom and lifestyle autonomy. Instead of living paycheck to paycheck, real estate investments have given many families a broader financial foundation to stand upon. Just remember that borrowing against the equity gained on your home doesn’t mean that it is free money, you should always have a plan to pay off what you borrowed.
You’ll need to put on your business owner hat to turn your house into a real estate investment. Right off the bat, you may benefit from incorporating yourself for tax benefits. As things grow, you may even have employees, scale to oversee multiple properties, learn about property marketing and listing, and more!
If you’ve ever desired to be a business owner, real estate investment can be a rewarding, lucrative market.
Someone Else Pays Your Mortgage for You
This point alone should catch every Texas homeowner’s attention. Whether you choose to lease using annual contracts or through a vacation rental site like AirBnb, the weight of paying off a huge mortgage can be minimized or entirely taken off your shoulders. If the monthly rent checks exceed the mortgage and property taxes, it’s even better.
Here’s what a writer at Entrepreneur had to say about rental properties vs. other types of business ownership:
“Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who gets to keep more?
That’s right: I do. Because the government rewards rental property owners.”
And Much More
We’ve only scratched the surface. Whether you buy and hold, flip the house, or lease it out, there are many additional benefits of investing in San Antonio real estate. Our list didn’t even dive into some of the basics: long-term financial security, a guard against inflation, and real estate appreciation.
Now that we’ve whet your appetite, let’s dive into the different types of real estate investment and some of the practical steps you can take to get started. After all, this article is for San Antonio homeowners who want to take those extra steps to directly monetize their property.
3 Main Types of Real Estate Investment
If you want to be hands-on with your real estate investments, house flipping can be a fun side project or even a full-time career. Don’t jump in before you know a thing or two about the risks, costs, best practices, and tricks of the trade. Watching HGTV can sometimes make the process seem easier than it actually is. Many people have found themselves way in over their heads because they didn’t understand the process as well as they could have before getting started.
If you want to start transforming shabby homes into magnificent ones, be vigilant. Learn from the experts before you dive in. Start with small investments to lower your risks.
Become a Landlord (or Short-Term Rental Host) in Texas
It’s a great time for San Antonio residents to turn their real estate investments into rental properties. One in three Texans pays rent, as opposed to owning their home. And according to CNBC, a higher percentage of Americans pay rent now than in 1965! So there’s business to be had if you have a home or room to rent out.
Landlords account for a major national industry. According to Rental Protection Agency, there are over 23 million landlords across the United States. This doesn’t even account for the large and growing short-term rental market. Apps like AirBnb have opened the door for homeowners to make money in the tourism market.
Make a (mostly) passive income by turning your home into a business.
Home values tend to increase over the years. Buy-and-hold investors are those who purchase a home and then wait several years--or even decades--to sell the house for a profit.
In the short term, buying a home and immediately selling it again (with little or no change done to the home during that time), will likely result in a loss for the homeowner because of closing costs and short-term fluctuations in house values.
Fortunately, while the short-term real estate market sees many ups and downs, the overall market trend is upward.
Most buy-and-hold investments are just families who decided to buy and build lifelong memories in their dream-home. Over the years, the home value appreciates. If the family eventually downsizes, they often sell having turned a comfortable profit without even trying.
In these cases, the home isn’t necessarily purchased with the intention of eventually selling. On the other hand, many long-term property owners exclusively buy Texas homes for the investment. Usually these investors also know that there are ways to streamline the buy-and-hold process to increase their profits along the way.
These streamlining methods include versions of the other two investments we’ve already discussed. When it comes to house flipping, long-term investors don’t care about restoring their house overnight. Instead, they take projects on slowly, knowing that years of slow improvement will significantly increase the value of the property when they finally choose to sell.
The other option is to turn your buy-and-hold into a rental opportunity. It’s easier to do today than ever before. Online listing services and mobile apps have made it easy to connect with potential short term and long term renters.